The Rise of Engagement in the 2012 Proxy Season

For many years Georgeson’s Annual Corporate Governance Review has promoted the concept of engagement between public companies and their institutional investors. While Georgeson has noticed increased engagement, the nature of the engagement has generally been incremental and devoted to specific governance and compensation issues from year to year. After years of this slow, incremental growth, the 2012 proxy season became the Year of Engagement and witnessed a marked increase in company/shareholder interaction — engagement that was not limited to a few days out of the five- or six-week period between the mailing of the corporate proxy statement and the last days of a proxy solicitation campaign prior to the annual meeting. The types of issues discussed leading up to and during the 2012 proxy season ranged from executive compensation and board structure to negotiations with proponents over the potential withdrawal of shareholder-sponsored ballot resolutions to just open-ended discussions to understand each other better. The voting statistics contained between these covers cannot fully measure that activity — although they do make it clear that the level of communication was more frequent and intense than in the past.

…continue reading: 2012 Annual Corporate Governance Review

The past decade has been a whirlwind for corporate governance in America. Since 2001, we have witnessed a myriad of scandals, epic corporate failures and legislative and regulatory attempts to prevent more of the same. Early on it was the failure of firms such as Enron, WorldCom and Global Crossing. More recently, the failure of financial stalwarts like Lehman Brothers, Bear Stearns and AIG nearly pushed our markets to the brink of collapse. These failures have ushered in a new era of shareholder activism and corporate governance initiatives, including extensive legislative reform efforts and new rules by the Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE) and the Financial Industry Regulatory Authority (FINRA).

While many of the proxy-related reforms have focused on enhanced disclosure requirements (the SEC has approved expansive new rules around director experience and qualifications, board leadership structure, board risk oversight responsibilities and Compensation Disclosure and Analysis (CD&A) disclosure), new regulations have been put in place that fundamentally shift what issues are considered by shareholder at annual meetings in the United States.

…continue reading: 2011 Annual Corporate Governance Review

According to our research, more than 300 companies subject to Dodd-Frank’s say-on-pay vote requirements have filed proxy statements thus far this year. Of those, 125 companies have held shareholder meetings at which shareholders have voted on advisory resolutions on the frequency in which say-on-pay resolutions should appear on the proxy ballot (commonly referred to as “say-on-frequency” or “say-WHEN-on-pay”), including 77 companies in the Russell 3,000 index and 55 companies in the S&P 1,500 index. Of the 125 votes submitted to date, more than 50% of companies have recommended triennial say-on-pay votes to their shareholders.

…continue reading: Early Results from 2011 Proxy Season Show Trends on “Say-on-Frequency” Resolutions

A brief look back to the 2009 proxy season reveals one of the most contentious seasons in recent memory. Investor support for board nominees was at an all-time low, proxy contests were at an all-time high and support for shareholder-sponsored resolutions had dramatically risen. As the 2010 proxy season approached, corporate directors knew that it was incumbent on them to restore the trust that was shattered by the market downturn.

The 2010 proxy season was the dawning of a new era in the way director nominees are elected because, for the first time, uncontested director elections were to be considered “non-routine” under New York Stock Exchange (“NYSE”) rules and thus could not be bolstered by the uninstructed broker discretionary vote. Companies also had to make adjustments in anticipation of the new legislation being drafted by Congress that had squarely focused its attention on reforming our financial system and that would impose new requirements on publicly traded companies to rein in perceived egregious compensation practices. Although companies knew that the reform efforts could not be enacted during the current proxy season, they were aware that the proposed changes could reshape the landscape of corporate governance in the United States. The past season demonstrated that companies are starting to prepare for the brave new world that shareholder activism and congressional reform are in the process of creating.

…continue reading: The 2010 Proxy Season: A Brave New World